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INFOLAWYER
INFOLAWYER, Attorney
Category: Legal
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Experience:  Licensed attorney helping individuals and businesses
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Hello, I have a question about a dispute a business associate

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Hello, I have a question about a dispute a business associate is having. He and his uncle started a Portrait company 29 years ago, my friend did all the photography and meeting with clients and his uncle just ran the office and the business and scheduling. The guy found out the uncle had taken out almost 300k in debt in the business name, after his salary started going down even though business was better than ever. So the guy freaked out and took half of the money in the corporate account out and half the photography equipment..now I know this is a form of piercing the corporate vail, so now the guy went and formed a new company and went back to the clients he had always served and told him he opened a new company. Now keep in mind they owned an S corporation and they were each 50% share holders in the company...so my guy thought he was justified in taking half the corporate assets, when he found out his long time business partner had been going behind his back and taking out
Submitted: 4 years ago.
Category: Legal
Expert:  INFOLAWYER replied 4 years ago.
What do you want to know and accomplish?
Customer: replied 4 years ago.
I want to know if the associate should give the money and photography equipment back to his partner and his company?

He wants to have nothing to do with his former partner and his former company. He is a 50% share holder in the company, but would like to give up all shares and rights and just go on doing business on his own.

I don't believe there is a clause in his bylaws/articles of incorporation that state he can't give up his shares and compete against his former company by going out and soliciting his former companies clients...(keep in mind he procured and serviced most of the clients...he was the photographer and he was essentially the company!

Thanks!
Expert:  INFOLAWYER replied 4 years ago.
he is free to do so but should negotiate a price for it after the company is appraised independently. As for competing, if there is no non compete, he is free to compete.
Customer: replied 4 years ago.
So if he doesn't give the money and equipment back can he be sued for the the money and equipment he took even though he owns half the company and he took less than half the money and equipment? Also can he be criminally charged for this or going after clients his former company serviced?

Thanks!
Expert:  INFOLAWYER replied 4 years ago.
As owner of half the interest, he has a right in the property. if he is sued, he can likewise sue for his 1/2 of the interest. This should be negotiated amicably underwhich he is bought out.
Customer: replied 4 years ago.
can you explain the statement "This should be negotiated amicably underwhich he is bought out"

Also would it be considered piercing the corporate vail if my associate went and took the cash out of the corporate bank account after discovering his partner had ran up debt and he wanted out of the company?

You didn't address the way my associate gets out of the former corporation and gives up all stock and ownership?

Thanks!
Expert:  INFOLAWYER replied 4 years ago.
Most partners dont just walk away from a business. They retain a lawyer to negotiate to be bought out and be paid for their interest or else to move the court to value, dissolve and divide the proceeds.
Customer: replied 4 years ago.
So if they don't do that what is the alternative..my associate is trying to do this without a lawyer and just walk away from the former company.

His former business partner is threatening him with a lawsuit and other charges.

what do you believe will happen if he keeps the equipment and the money and just goes on running his new company and services his former companies clients under his new company name?
Expert:  INFOLAWYER replied 4 years ago.
It would wise to reconsider using a lawyer to negotiate his interest and the assets he wants to take. Otherwise he risks getting nothing and being sued for taking company assets
Customer: replied 4 years ago.
So to sum it up your advice is to return the company assets and continue to run his new company? How can he get out of the old company, so he can't ever be held liable for debts his former partner ran up? Short of getting an attorney involved?
Expert:  INFOLAWYER replied 4 years ago.
Returning it and then negotiating being bought out would be prudent while beginning his new company. Part of the negotiation would include getting a release/indemnification, yet further reason to have a lawyer locally involved. Kindly accept my answer.
INFOLAWYER, Attorney
Category: Legal
Satisfied Customers: 50356
Experience: Licensed attorney helping individuals and businesses
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